1 00:00:00,280 --> 00:00:02,599 Speaker 1: This is Bloomberg Wall Street Week. 2 00:00:02,680 --> 00:00:07,360 Speaker 2: The global push into infrastructure, breaking the IPO logjam in text. 3 00:00:07,160 --> 00:00:09,120 Speaker 3: The financial stories that sheep. 4 00:00:08,880 --> 00:00:12,040 Speaker 2: Are were cutting inflation without losing jobs. Do we need 5 00:00:12,119 --> 00:00:14,560 Speaker 2: rate cuts? And if so? How many? Investing in a 6 00:00:14,560 --> 00:00:16,120 Speaker 2: time of geopolitical turmoil? 7 00:00:16,200 --> 00:00:18,560 Speaker 1: Through the eyes of the most influential voices. 8 00:00:18,720 --> 00:00:22,480 Speaker 2: Ten Rogueff Economists of Harvard, former FDIC had Shiela Bert 9 00:00:22,680 --> 00:00:27,360 Speaker 2: ge CEO, Larry Kulp, San Francisco Fed President Mary Daily Bloomberg. 10 00:00:26,840 --> 00:00:30,200 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. 11 00:00:30,280 --> 00:00:33,519 Speaker 2: Europe takes a right turn, Sherry Ridstone takes a pass 12 00:00:33,560 --> 00:00:36,320 Speaker 2: and the Fed, the Fed just takes it slow. This 13 00:00:36,440 --> 00:00:40,559 Speaker 2: is Bloomberg Wall Street Week. I'm David Weston this week Bloomberg. 14 00:00:40,640 --> 00:00:43,400 Speaker 2: Stephanie Flanders on what happened to Europe? 15 00:00:43,680 --> 00:00:46,879 Speaker 4: There was a particular humbling of the sort of center 16 00:00:47,120 --> 00:00:49,520 Speaker 4: and the established parties for sure. 17 00:00:49,520 --> 00:00:52,560 Speaker 2: Sharma of Rockefeller International on what happened to capitalism. 18 00:00:53,120 --> 00:00:55,480 Speaker 5: Every time we have a crisis, the billouts get bigger. 19 00:00:56,120 --> 00:00:58,760 Speaker 2: And Ron also of Munger, Tolls and Olson on his 20 00:00:58,880 --> 00:01:02,120 Speaker 2: half century at the side of Warren Buffett and Charlie Munger. 21 00:01:02,920 --> 00:01:06,039 Speaker 3: Neither Warren nor Jarlie are typical. 22 00:01:19,120 --> 00:01:21,960 Speaker 2: And we start with the backward looking economic numbers of 23 00:01:21,959 --> 00:01:24,040 Speaker 2: the United States this week and the forward looking statement 24 00:01:24,040 --> 00:01:26,959 Speaker 2: of economic productions from the FED and what the chair 25 00:01:27,160 --> 00:01:29,240 Speaker 2: Jay Powell had to say about it. And we welcome 26 00:01:29,319 --> 00:01:32,319 Speaker 2: back our very special contributor. He's Larry Summers of Harvey. So, Larry, 27 00:01:32,319 --> 00:01:34,000 Speaker 2: great to have you with us. What did you make 28 00:01:34,040 --> 00:01:36,880 Speaker 2: out if we had some encouraging numbers actually on inflation? 29 00:01:37,160 --> 00:01:38,920 Speaker 2: The same time, the FED is a little reluctant to 30 00:01:38,920 --> 00:01:40,560 Speaker 2: talk too quickly about cutting. 31 00:01:41,440 --> 00:01:42,960 Speaker 3: The numbers were encouraging. 32 00:01:43,480 --> 00:01:48,200 Speaker 6: It's one month, but you know, every month is data, 33 00:01:48,280 --> 00:01:51,720 Speaker 6: and I think the right posture has to be agnosticism 34 00:01:52,360 --> 00:01:56,760 Speaker 6: about where we are going forward. It's hard to interpret 35 00:01:56,840 --> 00:02:02,320 Speaker 6: the Fed's forecasts because they probably had a lot of 36 00:02:02,320 --> 00:02:07,080 Speaker 6: inertia with everybody having set their view coming into the meeting. 37 00:02:07,560 --> 00:02:11,959 Speaker 6: So it's not really clear that the projections that people 38 00:02:12,000 --> 00:02:16,480 Speaker 6: were making genuinely reflected the new numbers. 39 00:02:16,600 --> 00:02:19,480 Speaker 3: That was a point that Chairman Bowell stressed. 40 00:02:19,560 --> 00:02:22,040 Speaker 2: We also have fiscal policy issues coming up in a 41 00:02:22,080 --> 00:02:25,480 Speaker 2: sense around the ballot come November. There's increasing discussion about 42 00:02:25,480 --> 00:02:28,160 Speaker 2: the alternatives between Joe Biden and Donald Trump. There's a 43 00:02:28,160 --> 00:02:30,880 Speaker 2: fiscal policy, and you've been outspoken on the question, as 44 00:02:30,880 --> 00:02:33,600 Speaker 2: others have been, about the possibility of inflation with the 45 00:02:33,600 --> 00:02:34,800 Speaker 2: Trump economic policy. 46 00:02:34,960 --> 00:02:36,840 Speaker 3: Take us through that look. 47 00:02:37,040 --> 00:02:45,240 Speaker 6: I don't think there's been a more inflationary presidential economic 48 00:02:45,400 --> 00:02:53,400 Speaker 6: policy platform in my lifetime. Perhaps George McGovern in nineteen 49 00:02:53,480 --> 00:02:57,200 Speaker 6: seventy two in some ways would be a comparison, But 50 00:02:57,520 --> 00:03:02,079 Speaker 6: other than that, I don't think there's been remotely comparably 51 00:03:02,160 --> 00:03:09,400 Speaker 6: irresponsible set of proposals. His tariff proposals are the biggest 52 00:03:10,480 --> 00:03:16,600 Speaker 6: supply shock, pushing up prices not just of imported goods, 53 00:03:17,040 --> 00:03:22,840 Speaker 6: but of all the goods that compete with imported goods. 54 00:03:23,320 --> 00:03:29,400 Speaker 6: That anybody who's worried about gouging should think that more competition, 55 00:03:29,639 --> 00:03:36,960 Speaker 6: including from abroad, is a very very important step. And 56 00:03:37,520 --> 00:03:42,240 Speaker 6: he's for much greater restrictions on the supply of labor, 57 00:03:42,840 --> 00:03:46,160 Speaker 6: leading to more wage inflation. 58 00:03:47,160 --> 00:03:47,720 Speaker 3: Pressures. 59 00:03:48,400 --> 00:03:52,960 Speaker 6: And he's for scaling back the subsidies to renewable energy, 60 00:03:53,640 --> 00:03:59,040 Speaker 6: raising energy costs. So look at it from demand, look 61 00:03:59,080 --> 00:04:03,720 Speaker 6: at it from supp lie. This is a prescription for 62 00:04:04,000 --> 00:04:09,440 Speaker 6: a major increase in inflation, and of course the expectation 63 00:04:09,880 --> 00:04:14,480 Speaker 6: of that major increase in inflation and possibly the fact 64 00:04:14,520 --> 00:04:18,400 Speaker 6: that the FED will be under much more pressure to 65 00:04:18,560 --> 00:04:23,080 Speaker 6: prove that it's credible. This could easily be a prescription 66 00:04:23,480 --> 00:04:29,080 Speaker 6: for a ten percent mortgage rate, something that I lived 67 00:04:29,080 --> 00:04:31,800 Speaker 6: through and I bought my first house, but that I 68 00:04:31,800 --> 00:04:36,400 Speaker 6: didn't think we were going to see again in the 69 00:04:36,520 --> 00:04:41,760 Speaker 6: United States. This is really dangerous stuff. 70 00:04:42,720 --> 00:04:45,360 Speaker 2: Literally, we pick up on the tariff's issue specifically, as 71 00:04:45,400 --> 00:04:48,200 Speaker 2: we know President former President Trump traveled to Capitol Hill 72 00:04:48,200 --> 00:04:51,040 Speaker 2: this week and there were reports in the press that 73 00:04:51,160 --> 00:04:54,800 Speaker 2: he floated, at least as an idea replacing some are 74 00:04:54,839 --> 00:04:57,600 Speaker 2: all of income tax with tariffs. There was one report 75 00:04:57,600 --> 00:05:00,640 Speaker 2: that actually would just replace it entirely. Would do from 76 00:05:00,640 --> 00:05:01,960 Speaker 2: an macroeconomic point of. 77 00:05:01,960 --> 00:05:10,320 Speaker 6: View, Look, people miss people misspeak. Sometimes they're not serious 78 00:05:11,000 --> 00:05:16,880 Speaker 6: about the things they say. That's probably a feature of 79 00:05:17,839 --> 00:05:27,359 Speaker 6: candidate Trump. But replacing the income tax with revenue with 80 00:05:27,960 --> 00:05:37,880 Speaker 6: tariff would be the worst macroeconomic policy proposal in US history. 81 00:05:38,040 --> 00:05:44,080 Speaker 6: It of course burdens the middle class and the poor 82 00:05:44,480 --> 00:05:51,360 Speaker 6: who purchased goods we goods that exist on international markets. 83 00:05:51,680 --> 00:05:56,839 Speaker 6: So it's regressive, as many economic commentators have suggested, but 84 00:05:56,960 --> 00:05:58,400 Speaker 6: that is actually. 85 00:05:58,000 --> 00:06:00,680 Speaker 3: The least of it. Think about it this way. 86 00:06:01,680 --> 00:06:07,279 Speaker 6: The smoot Hawley tariffs, which did enormous damage some people 87 00:06:07,279 --> 00:06:11,479 Speaker 6: would say made the depression great, were six tenths of 88 00:06:11,520 --> 00:06:18,680 Speaker 6: one percent of GDP. If you replaced half of income 89 00:06:18,720 --> 00:06:21,560 Speaker 6: tax revenues, not all like he talked about, if you 90 00:06:21,680 --> 00:06:30,799 Speaker 6: replaced half of income tax revenues with tariffs, those would 91 00:06:30,800 --> 00:06:37,919 Speaker 6: be tax those would be tariffs six times smooth Hally levels. 92 00:06:38,480 --> 00:06:41,960 Speaker 6: That's got the potential to do enormous damage to the 93 00:06:41,960 --> 00:06:47,600 Speaker 6: competitiveness of every US exporter, to do huge damage to 94 00:06:48,279 --> 00:06:53,400 Speaker 6: all kinds of workers who use imported goods in what 95 00:06:53,480 --> 00:07:00,320 Speaker 6: their businesses produce. To create a downward spiral at as 96 00:07:00,680 --> 00:07:05,160 Speaker 6: much higher prices for everything we import means consumers have 97 00:07:05,279 --> 00:07:15,680 Speaker 6: less to spend on everything else, create worldwide economic warfare 98 00:07:16,160 --> 00:07:21,840 Speaker 6: as the rest of the world responds. This is a 99 00:07:22,000 --> 00:07:30,680 Speaker 6: prescription for the mother of all stagflations. Now, I don't 100 00:07:30,680 --> 00:07:36,200 Speaker 6: think it's likely to happen even if President Trump is elected, 101 00:07:36,280 --> 00:07:40,480 Speaker 6: so I don't know that markets should be discounting all 102 00:07:40,560 --> 00:07:45,920 Speaker 6: of that. But this is something that I think should 103 00:07:46,000 --> 00:07:48,520 Speaker 6: be viewed very ominously. 104 00:07:49,360 --> 00:07:51,360 Speaker 2: Okay, Larry, thank you so very much for being with us. 105 00:07:51,400 --> 00:07:54,080 Speaker 2: That's Larry Summers of Harvard, our very special contributor here 106 00:07:54,280 --> 00:07:58,920 Speaker 2: on Wall Street Week. Sunday's elections for the European Parliament 107 00:07:58,920 --> 00:08:02,040 Speaker 2: delivered a surprise set back for incumbents in France and Germany, 108 00:08:02,360 --> 00:08:06,240 Speaker 2: even leading French President Macran to call a snap parliamentary 109 00:08:06,280 --> 00:08:09,680 Speaker 2: election in France next month, and markets have reacted accordingly. 110 00:08:09,720 --> 00:08:11,880 Speaker 2: To explain the situation on what's likely to come next, 111 00:08:12,000 --> 00:08:15,480 Speaker 2: we welcome back Bloomberg Senior executive editor for Economics and Government, 112 00:08:15,600 --> 00:08:18,640 Speaker 2: Stephanie Flanders. So, Stephanie, not only does your job require this, 113 00:08:18,680 --> 00:08:21,080 Speaker 2: but you also have a podcast called voter Noamics where 114 00:08:21,080 --> 00:08:24,000 Speaker 2: you talk about economics budding up against politics. We certainly 115 00:08:24,040 --> 00:08:25,600 Speaker 2: see that in Europe right now. We see a lot 116 00:08:25,640 --> 00:08:28,040 Speaker 2: of movement in the French market particularly, but I guess 117 00:08:28,080 --> 00:08:30,640 Speaker 2: it was really triggered by these European parliamentary elections. 118 00:08:31,440 --> 00:08:33,719 Speaker 4: Yeah, and you have the European Parliamentary elections, which is, 119 00:08:33,800 --> 00:08:37,440 Speaker 4: you'll remember, its elections for the European Parliament, which is 120 00:08:37,559 --> 00:08:41,360 Speaker 4: controls some parts of European policy, not all parts of 121 00:08:41,400 --> 00:08:47,000 Speaker 4: European policy. And the sort of headline sounds uninteresting in 122 00:08:47,040 --> 00:08:50,320 Speaker 4: the sense that the sort of center grouping that's led 123 00:08:50,440 --> 00:08:55,560 Speaker 4: by represented by ursul LeVander Lyine, the current European Commission President, 124 00:08:56,360 --> 00:08:58,760 Speaker 4: did still emerge as the largest grouping. It got about 125 00:08:58,800 --> 00:09:02,280 Speaker 4: sixty percent of the votes. But as expected, you did 126 00:09:02,400 --> 00:09:05,640 Speaker 4: have quite a lot of success. About quarter of the 127 00:09:05,720 --> 00:09:09,640 Speaker 4: votes went to far right parties. And as you say, 128 00:09:09,679 --> 00:09:13,120 Speaker 4: there was a particular humbling of the sort of center 129 00:09:13,320 --> 00:09:17,280 Speaker 4: and the established parties in France and Germany. Olaf Schual 130 00:09:17,640 --> 00:09:23,120 Speaker 4: Socialist Party was completely hammered by the Alternative for Deutschland 131 00:09:23,200 --> 00:09:26,080 Speaker 4: and other parties in Germany, and you had the rise 132 00:09:26,360 --> 00:09:30,160 Speaker 4: of Harassan Bleumre Nacionale used to be the National Front, 133 00:09:30,240 --> 00:09:31,720 Speaker 4: the far right party in France. 134 00:09:32,000 --> 00:09:33,680 Speaker 2: So let's turn to France from her, because that was 135 00:09:33,720 --> 00:09:36,800 Speaker 2: an immediate aftermath of this. As we saw President mccront 136 00:09:36,800 --> 00:09:38,839 Speaker 2: I think surprise, maybe even his own party and say 137 00:09:38,880 --> 00:09:40,800 Speaker 2: let's have a snap election right away. 138 00:09:40,800 --> 00:09:41,079 Speaker 3: Here. 139 00:09:41,440 --> 00:09:44,480 Speaker 2: At the same time, there's a real resurgence of the 140 00:09:44,600 --> 00:09:47,120 Speaker 2: right of center, maybe well right of center of Marie 141 00:09:47,160 --> 00:09:49,760 Speaker 2: Le Penn and her party. What could that mean the 142 00:09:49,840 --> 00:09:52,679 Speaker 2: selection in terms of the French economy, you know. 143 00:09:52,640 --> 00:09:53,400 Speaker 5: It's extraordinary. 144 00:09:53,559 --> 00:09:55,040 Speaker 4: We had at the start of the a few weeks 145 00:09:55,080 --> 00:09:57,559 Speaker 4: ago we had the surprise decision by Richie Sounact to 146 00:09:57,559 --> 00:09:59,200 Speaker 4: call an election, but he did have to kind of 147 00:09:59,200 --> 00:10:00,800 Speaker 4: call one in the next months, and we were just 148 00:10:00,800 --> 00:10:04,480 Speaker 4: surprised that he was doing it sooner in Matt Kroll's case, 149 00:10:04,520 --> 00:10:06,520 Speaker 4: and he surprised people in his own office. As far 150 00:10:06,520 --> 00:10:08,679 Speaker 4: as we can see, he held it very close to 151 00:10:08,679 --> 00:10:11,520 Speaker 4: that decision. He's kind of got a reputation in the 152 00:10:11,600 --> 00:10:14,160 Speaker 4: past for having taken enormous risks. He took an enormous 153 00:10:14,240 --> 00:10:17,679 Speaker 4: risk in running for president without an established party all 154 00:10:17,720 --> 00:10:20,120 Speaker 4: those years ago, so you can see this as kind 155 00:10:20,120 --> 00:10:23,559 Speaker 4: of part of his mo o. But it has left 156 00:10:23,640 --> 00:10:26,840 Speaker 4: open a wide range of outcomes and. 157 00:10:26,760 --> 00:10:30,400 Speaker 2: The one really source of stability, ironically appears to be 158 00:10:30,440 --> 00:10:33,079 Speaker 2: Italy and Ms Maloney, who came out of these elections 159 00:10:33,160 --> 00:10:35,080 Speaker 2: rather well. There was a time that lot that long 160 00:10:35,120 --> 00:10:36,840 Speaker 2: ago where we thought she was sort of an extreme 161 00:10:37,240 --> 00:10:40,200 Speaker 2: but now she's seeing a reasonable centrist. 162 00:10:40,440 --> 00:10:40,600 Speaker 3: Yeah. 163 00:10:40,640 --> 00:10:42,320 Speaker 4: I mean, it's very interesting, isn't it. And we are 164 00:10:42,320 --> 00:10:45,120 Speaker 4: going to see her the end of this week. 165 00:10:45,200 --> 00:10:46,920 Speaker 5: We've had her. 166 00:10:47,000 --> 00:10:51,000 Speaker 4: Leading the hosting the G seven summit in Pulio, which 167 00:10:51,040 --> 00:10:52,520 Speaker 4: is not a bad place to have it this time 168 00:10:52,520 --> 00:10:56,839 Speaker 4: of year, and very amicable, considered to be a very 169 00:10:56,840 --> 00:11:00,560 Speaker 4: credible leader in Europe, has very much been normalized and 170 00:11:00,600 --> 00:11:03,200 Speaker 4: become the acceptable face of the far right in Europe. 171 00:11:03,240 --> 00:11:06,720 Speaker 4: I would you know, she's got some problems percolating under 172 00:11:06,760 --> 00:11:11,240 Speaker 4: the surface. The Italian debt, always an issue, is becoming 173 00:11:11,280 --> 00:11:13,040 Speaker 4: more and more of an issue. It's now on a 174 00:11:13,120 --> 00:11:17,040 Speaker 4: more unsustainable path and could has already in fact is 175 00:11:17,120 --> 00:11:20,680 Speaker 4: violating the European Union's rules on how much you can borrow. 176 00:11:20,920 --> 00:11:22,600 Speaker 4: So she's going to be having a tussle with them 177 00:11:22,640 --> 00:11:25,040 Speaker 4: about how much she has to tighten policy, and that 178 00:11:25,080 --> 00:11:28,720 Speaker 4: could make her more politically unpopular in Italy. But you know, 179 00:11:28,760 --> 00:11:31,000 Speaker 4: it is interesting you see the likes of Marine la 180 00:11:31,040 --> 00:11:33,800 Speaker 4: Penn in France, who has a very odd mixture of 181 00:11:33,840 --> 00:11:37,280 Speaker 4: economic policies, quite far left policies that I think investors 182 00:11:37,280 --> 00:11:40,080 Speaker 4: would be concerned about. She you know, many people are 183 00:11:40,080 --> 00:11:43,280 Speaker 4: saying the best path for her if she would be 184 00:11:43,360 --> 00:11:46,680 Speaker 4: the sort of maloney path of actually building credibility with 185 00:11:46,760 --> 00:11:50,920 Speaker 4: the markets and being mainstream in economic ways even as 186 00:11:51,000 --> 00:11:54,400 Speaker 4: you are being quite far right or certainly culturally right 187 00:11:54,679 --> 00:11:58,000 Speaker 4: on immigration and other things. So that's another interesting doesn't 188 00:11:58,000 --> 00:11:59,840 Speaker 4: look like Marine la Penn's really going to be able 189 00:11:59,880 --> 00:12:02,520 Speaker 4: to pull off the same trick that Georgia Maloney's pulled off. 190 00:12:02,800 --> 00:12:04,600 Speaker 2: Stephanie, thank you, so, it's always great to have you 191 00:12:04,640 --> 00:12:10,160 Speaker 2: with us. That is Bloomberg's own She's Stephanie Flanders. Coming up, 192 00:12:10,200 --> 00:12:12,840 Speaker 2: we look at where the Indian economy heads next, as 193 00:12:12,840 --> 00:12:16,040 Speaker 2: Prime Minister Mody begins his third term with the Rasher 194 00:12:16,080 --> 00:12:18,079 Speaker 2: Sharma of Rockefeller International. 195 00:12:18,760 --> 00:12:22,480 Speaker 5: Even though Moody one, it is seen by many people 196 00:12:22,640 --> 00:12:24,199 Speaker 5: as some sort of a Motori defeat. 197 00:12:25,480 --> 00:12:27,640 Speaker 2: That's next on Wall Street Week on Bloomberg. 198 00:12:29,559 --> 00:12:33,800 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 199 00:12:33,920 --> 00:12:36,599 Speaker 1: Bloomberg Radio. 200 00:12:41,559 --> 00:12:44,000 Speaker 2: This is Wall Street Week. I'm David Weston. Prime Minister 201 00:12:44,120 --> 00:12:47,240 Speaker 2: Mody has begun his third term after an election that 202 00:12:47,400 --> 00:12:50,520 Speaker 2: did not give his party the clear majority many had expected. 203 00:12:50,760 --> 00:12:53,160 Speaker 2: To take us through what we should expect next, Welcome 204 00:12:53,160 --> 00:12:56,400 Speaker 2: back now Rashir Sharma. He's chairman of Rockefeller International and 205 00:12:56,600 --> 00:12:59,480 Speaker 2: author of the new book What Went Wrong with Capitalist 206 00:12:59,480 --> 00:12:59,960 Speaker 2: and Welcome back. 207 00:13:00,600 --> 00:13:01,199 Speaker 5: Thanks David. 208 00:13:01,280 --> 00:13:03,040 Speaker 2: So we're going to talk about your new book. Before that, 209 00:13:03,120 --> 00:13:05,040 Speaker 2: let's just spend a minute or two on India, because 210 00:13:05,040 --> 00:13:07,360 Speaker 2: we've talked about it before. You were one of the 211 00:13:07,400 --> 00:13:10,080 Speaker 2: first ones that I saw who suggested maybe it wouldn't 212 00:13:10,120 --> 00:13:13,040 Speaker 2: be a landslide for Moti. What are the possible consequences 213 00:13:13,080 --> 00:13:14,880 Speaker 2: you think for economic policy of what we've seen. 214 00:13:15,640 --> 00:13:17,840 Speaker 5: Well, I think that the way the election result has 215 00:13:17,880 --> 00:13:20,520 Speaker 5: been interpreted is that in some ways it's seen as 216 00:13:20,600 --> 00:13:23,560 Speaker 5: if this is a two speed economy going on in India. 217 00:13:23,679 --> 00:13:27,600 Speaker 5: That the urban consumer is in good health and almost booming, 218 00:13:27,960 --> 00:13:31,080 Speaker 5: but the rural economy in India in many parts at least, 219 00:13:31,520 --> 00:13:35,360 Speaker 5: is in some sort of distress. So I suspect that 220 00:13:35,440 --> 00:13:39,480 Speaker 5: there'll be some shift in terms of the spending priorities 221 00:13:39,480 --> 00:13:42,599 Speaker 5: of the government in favor more of the rural economy 222 00:13:42,720 --> 00:13:45,040 Speaker 5: and trying to do something a bit more about that. 223 00:13:45,520 --> 00:13:47,680 Speaker 5: But I'd say the big takeaway of this election, and 224 00:13:47,720 --> 00:13:49,319 Speaker 5: I think that this is something which I think has 225 00:13:49,360 --> 00:13:53,680 Speaker 5: been really underappreciated. If you look at elections around the world, 226 00:13:53,720 --> 00:13:56,080 Speaker 5: and particularly if you look at even India's electoral history, 227 00:13:56,559 --> 00:13:59,480 Speaker 5: after an election, it is usually viewed as a mandate 228 00:13:59,600 --> 00:14:02,520 Speaker 5: for some thing, and at the same time, the opposition, 229 00:14:03,080 --> 00:14:05,600 Speaker 5: at least for a while, goes into retreat. They've just 230 00:14:05,640 --> 00:14:09,320 Speaker 5: lost an election. They go into retreat and try and regroup. 231 00:14:09,720 --> 00:14:12,720 Speaker 5: What's very unique about this Indian election is that even 232 00:14:12,800 --> 00:14:16,560 Speaker 5: though Modi one, it is seen by many people as 233 00:14:16,600 --> 00:14:19,000 Speaker 5: some sort of a model defeat just because the benchmark 234 00:14:19,120 --> 00:14:22,520 Speaker 5: was so high and he's ended up with seats which 235 00:14:22,520 --> 00:14:25,040 Speaker 5: are well short of the majority mark, just for his 236 00:14:25,080 --> 00:14:28,800 Speaker 5: own party. On the other hand, the opposition is already 237 00:14:28,880 --> 00:14:33,000 Speaker 5: behaving as if it won. It's been emboldened. It's out 238 00:14:33,040 --> 00:14:36,800 Speaker 5: there much more aggressive, and a lot of the postport 239 00:14:36,920 --> 00:14:40,320 Speaker 5: analysis is why did the opposition do so well? So 240 00:14:40,360 --> 00:14:43,560 Speaker 5: this is a very strange election that way, that it's 241 00:14:43,600 --> 00:14:46,520 Speaker 5: not been a cleansing or a catharsis. In some way, 242 00:14:46,960 --> 00:14:50,080 Speaker 5: it's been like in terms of the consequences are going 243 00:14:50,160 --> 00:14:52,640 Speaker 5: to be that the opposition from day one is going 244 00:14:52,680 --> 00:14:56,880 Speaker 5: to be emboldened and I dare say almost disruptive. So 245 00:14:56,920 --> 00:15:00,440 Speaker 5: I don't see that much policy action take place in 246 00:15:00,440 --> 00:15:02,360 Speaker 5: India given this verdict. 247 00:15:02,560 --> 00:15:06,120 Speaker 2: You mentioned urban versus rural. What about socioeconomic distinctions, because 248 00:15:06,200 --> 00:15:07,960 Speaker 2: there have been some reports I've seen that. In fact, 249 00:15:08,240 --> 00:15:10,960 Speaker 2: one of the things that turned on providence fromorality was 250 00:15:11,000 --> 00:15:13,040 Speaker 2: the fact that the lower income people felt that they'd 251 00:15:13,040 --> 00:15:14,000 Speaker 2: been left behind. 252 00:15:14,560 --> 00:15:17,200 Speaker 5: Yeah, but I think there are many stories in India 253 00:15:17,240 --> 00:15:19,280 Speaker 5: because you know, what is true in one state is 254 00:15:19,280 --> 00:15:21,560 Speaker 5: not true in another state. And I think that's the 255 00:15:21,960 --> 00:15:24,680 Speaker 5: part about India which we have spoken about, and something 256 00:15:24,680 --> 00:15:27,880 Speaker 5: which I think is not you know, fully understood by 257 00:15:27,880 --> 00:15:31,760 Speaker 5: many people that what happened in this election also is 258 00:15:31,800 --> 00:15:35,480 Speaker 5: that there was no wave. There was no wave for Modi. Instead, 259 00:15:35,840 --> 00:15:39,040 Speaker 5: we ended up in the traditional India where every state 260 00:15:39,160 --> 00:15:42,560 Speaker 5: had its own contest in many ways, and so therefore 261 00:15:42,560 --> 00:15:45,320 Speaker 5: you got an outcome which was an aggregation of what 262 00:15:45,360 --> 00:15:47,600 Speaker 5: the various states were doing. And you're right there was 263 00:15:47,640 --> 00:15:50,320 Speaker 5: some feeling in some states which even I traveled to, 264 00:15:50,440 --> 00:15:54,200 Speaker 5: such as Maharashtra, where a lot of people felt that 265 00:15:54,240 --> 00:15:56,840 Speaker 5: they were not getting the benefits of what was being 266 00:15:56,920 --> 00:15:59,760 Speaker 5: promised and they were facing some sort of local issues. 267 00:16:00,080 --> 00:16:02,880 Speaker 5: So that's true in terms of socio economic divide. And yes, 268 00:16:03,120 --> 00:16:05,920 Speaker 5: more of the poet it seems, did vote, and more 269 00:16:05,960 --> 00:16:08,480 Speaker 5: of the so called what they call it India, the 270 00:16:08,520 --> 00:16:13,160 Speaker 5: backward cast, they voted for the opposition parties rather than 271 00:16:13,160 --> 00:16:15,080 Speaker 5: more these So that's true, but it's a much more 272 00:16:15,400 --> 00:16:18,080 Speaker 5: nuanced story. But the broad takeaway, as I said, is 273 00:16:18,120 --> 00:16:21,600 Speaker 5: that I expect very little to get done in terms 274 00:16:21,600 --> 00:16:25,320 Speaker 5: of new policies over the next year from an economic perspective. 275 00:16:25,400 --> 00:16:26,840 Speaker 2: One of the things we talked about in the past, 276 00:16:27,120 --> 00:16:31,520 Speaker 2: was the growth policies of Premiercermoti combined with relative restraint 277 00:16:31,600 --> 00:16:34,760 Speaker 2: on inflation being able to really contain That is it 278 00:16:34,960 --> 00:16:36,440 Speaker 2: likely that in order to reach out to some of 279 00:16:36,480 --> 00:16:38,200 Speaker 2: the people that he did not bring along with him, 280 00:16:38,280 --> 00:16:41,400 Speaker 2: Premian Soromoti will be driven to drive higher inflation through 281 00:16:41,440 --> 00:16:42,320 Speaker 2: more stimulus. 282 00:16:42,640 --> 00:16:45,320 Speaker 5: I hope not, because I feel that if there's one 283 00:16:46,360 --> 00:16:49,240 Speaker 5: relative success story that the government had over the last 284 00:16:49,240 --> 00:16:52,600 Speaker 5: five to ten years, it was on keeping inflation relatively low. 285 00:16:52,640 --> 00:16:54,640 Speaker 5: And of course in India's case, whenever you go out 286 00:16:54,680 --> 00:16:56,880 Speaker 5: and talk to people, they will always tell you that 287 00:16:57,040 --> 00:16:59,880 Speaker 5: rising prices is an issue because in India's case, so 288 00:17:00,040 --> 00:17:03,160 Speaker 5: many people are living at the margin they can't afford 289 00:17:03,240 --> 00:17:06,480 Speaker 5: any increase in prices. But generally, in India's case, the 290 00:17:06,560 --> 00:17:10,040 Speaker 5: inflation performance was much better. In fact, the big problem 291 00:17:10,040 --> 00:17:12,280 Speaker 5: with the previous government was that they let inflation get 292 00:17:12,280 --> 00:17:16,240 Speaker 5: out of control. So I think if he has any 293 00:17:16,280 --> 00:17:18,840 Speaker 5: sort of you know, like sensitivity to what people want, 294 00:17:18,880 --> 00:17:20,320 Speaker 5: and I think this is true everywhere we see it 295 00:17:20,359 --> 00:17:22,880 Speaker 5: in the US as well, that we don't know whether 296 00:17:22,960 --> 00:17:25,480 Speaker 5: good economic growth gets you re elected, but we do 297 00:17:25,600 --> 00:17:27,720 Speaker 5: know for sure that if you end up with high 298 00:17:27,720 --> 00:17:31,520 Speaker 5: inflation that gets you into big trouble. And even the US, 299 00:17:31,560 --> 00:17:35,119 Speaker 5: which we'll speak about, the high inflation rates of the 300 00:17:35,200 --> 00:17:37,840 Speaker 5: last three to four years are a real problem for 301 00:17:37,880 --> 00:17:39,040 Speaker 5: the Biden administration. 302 00:17:40,600 --> 00:17:44,080 Speaker 2: Congratulations for share another book out. So let's talk about 303 00:17:44,080 --> 00:17:46,760 Speaker 2: it exactly the thesis of this book, because it is 304 00:17:46,760 --> 00:17:49,000 Speaker 2: a statement, not a question about what went wrong? So 305 00:17:49,200 --> 00:17:51,440 Speaker 2: what has gone wrong? How do you know it's gone wrong? 306 00:17:51,840 --> 00:17:53,840 Speaker 5: When I look at the poll numbers, for example, that 307 00:17:54,400 --> 00:17:56,760 Speaker 5: on one hand, you have, like, you know, all this 308 00:17:56,920 --> 00:18:01,480 Speaker 5: great data that the American economy is relatively resilient. But 309 00:18:01,560 --> 00:18:03,240 Speaker 5: if you look at the number of people who are 310 00:18:03,280 --> 00:18:06,639 Speaker 5: happy in America with the state of the economic union, 311 00:18:07,119 --> 00:18:10,280 Speaker 5: it is at close to record lows. According to many Poles, 312 00:18:10,359 --> 00:18:13,919 Speaker 5: there are about seven to ten Americans today who want 313 00:18:14,040 --> 00:18:17,560 Speaker 5: the major change to the economic system or, in the 314 00:18:17,640 --> 00:18:20,720 Speaker 5: language of the polls, have it completely torn down. You know, 315 00:18:20,760 --> 00:18:24,480 Speaker 5: that's pretty dramatic. There are only about thirty five percent 316 00:18:24,560 --> 00:18:27,119 Speaker 5: or so Americans today who feel that they're going to 317 00:18:27,119 --> 00:18:30,359 Speaker 5: be better off than their parents. Fifty sixty years ago, 318 00:18:30,760 --> 00:18:33,280 Speaker 5: about seventy eighty percent of Americans felt that they would 319 00:18:33,280 --> 00:18:35,040 Speaker 5: be better off than their parents. So there's a real 320 00:18:35,160 --> 00:18:38,439 Speaker 5: feeling that something has gone wrong. And I think that 321 00:18:38,520 --> 00:18:41,560 Speaker 5: it's particularly the fact to do with capitalism that most 322 00:18:41,600 --> 00:18:44,840 Speaker 5: young democrats in particular in America today say they would 323 00:18:44,960 --> 00:18:48,840 Speaker 5: rather have socialism than have capitalism. Now that's such a 324 00:18:48,880 --> 00:18:54,480 Speaker 5: big statement for this beacon of American capitalism and all 325 00:18:54,480 --> 00:18:58,520 Speaker 5: that we've spoken about of global capitalism. Rather, they are 326 00:18:58,560 --> 00:19:02,720 Speaker 5: saying that they would rather have socialism a large cohort 327 00:19:02,760 --> 00:19:05,920 Speaker 5: of the millennials and the young people, rather than have capitalism. 328 00:19:05,960 --> 00:19:08,800 Speaker 5: So something has gone wrong. And what I've done in 329 00:19:08,840 --> 00:19:10,680 Speaker 5: this book is to sort of look at deep down 330 00:19:11,160 --> 00:19:14,280 Speaker 5: what's gone wrong, because, as they say, the first step 331 00:19:14,640 --> 00:19:17,399 Speaker 5: to a cute is to first diagnose the problem. But 332 00:19:17,440 --> 00:19:20,240 Speaker 5: I feel that in America today we're not even diagnosing 333 00:19:20,280 --> 00:19:21,520 Speaker 5: what the underlying problem is. 334 00:19:22,000 --> 00:19:24,080 Speaker 2: Why does it make sense from your partu view having 335 00:19:24,160 --> 00:19:26,679 Speaker 2: studied this, Now, if you didn't know anything about our society, 336 00:19:26,680 --> 00:19:28,080 Speaker 2: if you didn't read any of the media, you didn't 337 00:19:28,080 --> 00:19:29,720 Speaker 2: read any of the polls, and you looked at our 338 00:19:29,760 --> 00:19:32,560 Speaker 2: growth rate, which is add or above historical trend lines. 339 00:19:32,680 --> 00:19:35,639 Speaker 2: You looked at unemployment which is close to lows of 340 00:19:35,640 --> 00:19:38,680 Speaker 2: all time, most indications would say this should be a 341 00:19:38,720 --> 00:19:39,800 Speaker 2: pretty happy economy. 342 00:19:39,920 --> 00:19:42,639 Speaker 5: So why is it not exactly so? Because after I 343 00:19:42,680 --> 00:19:44,240 Speaker 5: said that, there's a sliver it at the top, which 344 00:19:44,280 --> 00:19:46,840 Speaker 5: is doing very well, But we have this two track 345 00:19:46,880 --> 00:19:49,560 Speaker 5: economy out here that even now if you look at it, 346 00:19:49,960 --> 00:19:52,920 Speaker 5: you know, the bottom fifty to sixty percent, they don't 347 00:19:52,960 --> 00:19:56,520 Speaker 5: have any excess savings. They're not being able to spend 348 00:19:56,520 --> 00:19:59,200 Speaker 5: that much. And as I said that, there's a feeling 349 00:19:59,640 --> 00:20:02,480 Speaker 5: that they're being squashed by what's happening at the top. 350 00:20:02,600 --> 00:20:06,800 Speaker 5: That today in America, economic mobility, social mobility, all of 351 00:20:07,440 --> 00:20:10,360 Speaker 5: declined significantly, Like this is a country where people would 352 00:20:10,400 --> 00:20:12,680 Speaker 5: move around, a lot of people would be in search 353 00:20:12,720 --> 00:20:15,000 Speaker 5: of an opportunity. As I said, there's a real feeling 354 00:20:15,080 --> 00:20:18,920 Speaker 5: in America today that they don't have equality of opportunity. 355 00:20:19,119 --> 00:20:22,119 Speaker 2: Is it the government's fault in this sense? Two and eight, 356 00:20:22,119 --> 00:20:24,160 Speaker 2: two thousand and nine, we had the Great Financial Crisis. 357 00:20:24,200 --> 00:20:27,120 Speaker 2: There was concern about a depression, not just a great recession, 358 00:20:27,280 --> 00:20:29,800 Speaker 2: but a depression, and there was a lot of government intervention, 359 00:20:29,840 --> 00:20:31,920 Speaker 2: both on the monetary side and the fiscal side. A 360 00:20:31,960 --> 00:20:34,240 Speaker 2: lot of people thought that was necessary to save us 361 00:20:34,280 --> 00:20:36,399 Speaker 2: and maybe the world from depression. Then you had a 362 00:20:36,440 --> 00:20:39,960 Speaker 2: pandemic and we brought the economy to a stop, and 363 00:20:40,000 --> 00:20:41,800 Speaker 2: again it was start. There did be a lot of stimulus. 364 00:20:42,280 --> 00:20:44,360 Speaker 2: Was it the government's fault? Didn't they need to come 365 00:20:44,400 --> 00:20:47,040 Speaker 2: in and have this level of stimulus and support. 366 00:20:47,200 --> 00:20:48,600 Speaker 5: Yeah. As I say in the book that when we 367 00:20:48,720 --> 00:20:51,960 Speaker 5: have a crisis, I can understand that the government needs 368 00:20:52,000 --> 00:20:54,399 Speaker 5: to intervene. I'm not a kind of person who's you know, 369 00:20:54,520 --> 00:20:56,920 Speaker 5: liquidation is that we just let things sort of, you know, 370 00:20:57,000 --> 00:20:59,920 Speaker 5: go and melt away on its own. What I'm trying 371 00:20:59,920 --> 00:21:01,520 Speaker 5: to it would have shown in the book is just 372 00:21:01,560 --> 00:21:03,919 Speaker 5: look at the progression of capitalism over the last one 373 00:21:04,000 --> 00:21:08,400 Speaker 5: hundred years. We have gone from this liquidationist argument which 374 00:21:08,440 --> 00:21:12,120 Speaker 5: caused the Great Depression in the nineteen thirties, to now 375 00:21:12,160 --> 00:21:16,719 Speaker 5: an impulse where you liquefy, liquefy, liquefy that the moment 376 00:21:16,800 --> 00:21:19,960 Speaker 5: you have even the slightest crisis like you had last 377 00:21:20,000 --> 00:21:24,200 Speaker 5: year with the SVB or some the impulses, that we 378 00:21:24,359 --> 00:21:26,520 Speaker 5: got to intervene, we got to save. And the problem 379 00:21:26,600 --> 00:21:29,240 Speaker 5: is that we only have one case point, which is 380 00:21:29,280 --> 00:21:32,120 Speaker 5: what we use all the time to justify intervention, which 381 00:21:32,119 --> 00:21:34,200 Speaker 5: is that we think, if you don't intervene, we'll have 382 00:21:34,280 --> 00:21:37,720 Speaker 5: another great depression. That is the argument used all the time. 383 00:21:37,880 --> 00:21:40,679 Speaker 5: But what's the result today. The result today is the 384 00:21:40,680 --> 00:21:45,240 Speaker 5: fact that bankruptcies are close to a record low. We 385 00:21:45,320 --> 00:21:48,000 Speaker 5: have the number of new startups instead, which have been 386 00:21:48,080 --> 00:21:51,440 Speaker 5: coming up, right, but until the pandemic like have been declining. 387 00:21:51,720 --> 00:21:55,359 Speaker 5: So if you keep so much deadwood alive, and you 388 00:21:55,520 --> 00:21:59,679 Speaker 5: keep so many incumbents and entrenched billionaires and oligopolies alive, 389 00:22:00,040 --> 00:22:03,919 Speaker 5: you're not allowing new things to really surface. And the 390 00:22:03,960 --> 00:22:06,960 Speaker 5: middle in particular is getting squeezed. So the argument in 391 00:22:07,000 --> 00:22:08,600 Speaker 5: the book is that you're right that when we have 392 00:22:08,760 --> 00:22:11,679 Speaker 5: in a crisis, you need some government help. But this 393 00:22:11,760 --> 00:22:14,240 Speaker 5: is not just about crisis. This is about every time 394 00:22:14,240 --> 00:22:17,600 Speaker 5: there's a minor flutter, you end up getting domin intervention. 395 00:22:18,000 --> 00:22:21,240 Speaker 5: And it's not just about government spending. As I said, 396 00:22:21,440 --> 00:22:24,720 Speaker 5: look at the amount of regulations every year, Like in 397 00:22:24,760 --> 00:22:29,920 Speaker 5: America we introduce three thousand new regulations. How many regulations 398 00:22:29,960 --> 00:22:34,080 Speaker 5: have we withdrawn over the last twenty years, twenty in total? Right, 399 00:22:34,160 --> 00:22:37,399 Speaker 5: So we got a regulatory state, a bailout nation that 400 00:22:37,480 --> 00:22:41,040 Speaker 5: in America in the sixties and seventies, and all bailing 401 00:22:41,080 --> 00:22:44,080 Speaker 5: out a private sector company in America was considered heretically. 402 00:22:44,359 --> 00:22:46,840 Speaker 5: We are America, we don't do this. Then you begin 403 00:22:46,920 --> 00:22:51,120 Speaker 5: with the nineteen eighty four first big financial institution bailout 404 00:22:51,119 --> 00:22:55,200 Speaker 5: in terms of continental Illinois, and after that, progressively, every 405 00:22:55,240 --> 00:22:57,720 Speaker 5: time we have a crisis, the bailouts get bigger. And 406 00:22:57,800 --> 00:22:59,520 Speaker 5: so that's again sort of you know, leaves a feeling 407 00:22:59,560 --> 00:23:02,040 Speaker 5: with people that are you really a bailout nation? And 408 00:23:02,080 --> 00:23:06,040 Speaker 5: if these you know, rich corporates are getting bailed out, 409 00:23:06,160 --> 00:23:08,360 Speaker 5: the Irish person thinks, why am I not getting moored 410 00:23:08,359 --> 00:23:13,240 Speaker 5: out of this? So it's about regulation, it's about bailouts. 411 00:23:13,359 --> 00:23:16,200 Speaker 5: It's about government spending, which has gone up from three 412 00:23:16,240 --> 00:23:18,840 Speaker 5: percent of GDP one hundred years ago to thirty six 413 00:23:18,920 --> 00:23:24,360 Speaker 5: percent of GDB today through every administration. We're almost regarding 414 00:23:24,400 --> 00:23:26,159 Speaker 5: some air pockets here there or the other, we have 415 00:23:26,200 --> 00:23:28,520 Speaker 5: seen an increase in government spending. 416 00:23:28,200 --> 00:23:30,600 Speaker 2: Every administration, incruing Reagan because people tend to think of 417 00:23:30,720 --> 00:23:33,960 Speaker 2: Ronald Reagan as being a smaller government philosophy. 418 00:23:34,080 --> 00:23:35,880 Speaker 5: Yeah, but the facts just don't bear it out. Because 419 00:23:35,960 --> 00:23:40,160 Speaker 5: under his administration, government spending increases slowed down a bit, 420 00:23:40,200 --> 00:23:43,800 Speaker 5: but they kept on sort of you know, carrying on 421 00:23:43,840 --> 00:23:46,480 Speaker 5: at pretty high levels. And then if you look at 422 00:23:46,480 --> 00:23:48,000 Speaker 5: it in terms of what happened under him as far 423 00:23:48,040 --> 00:23:51,400 Speaker 5: as regulations were concerned, even though under Reagan too those 424 00:23:51,480 --> 00:23:54,040 Speaker 5: kept on going up. The only deregulation we saw was 425 00:23:54,040 --> 00:23:56,760 Speaker 5: the financial sector. The financial sectors a lots of deregulation, 426 00:23:57,160 --> 00:23:59,720 Speaker 5: but outside of that, for the small and medium sized businesses, 427 00:24:00,040 --> 00:24:02,239 Speaker 5: the regulatory burden has kept getting bigger. And this has 428 00:24:02,320 --> 00:24:05,040 Speaker 5: real consequences, David, because it means that if you're looking 429 00:24:05,320 --> 00:24:07,639 Speaker 5: to start a new business, the cost of doing that 430 00:24:07,760 --> 00:24:13,000 Speaker 5: today is way higher on Wall Street, where for example, 431 00:24:13,040 --> 00:24:15,560 Speaker 5: if you're looking to start a fund today, it's ten 432 00:24:15,680 --> 00:24:18,760 Speaker 5: times in terms of the cost compared to twenty years ago. 433 00:24:18,880 --> 00:24:21,280 Speaker 5: So you know, that just means that if you're already 434 00:24:21,280 --> 00:24:23,360 Speaker 5: in business, or if you're a big person in business, 435 00:24:23,600 --> 00:24:27,200 Speaker 5: you're able to benefit. So capitalism today in its distorted form, 436 00:24:27,280 --> 00:24:30,880 Speaker 5: has become pro incumbent, and it has become a pro 437 00:24:30,920 --> 00:24:33,960 Speaker 5: big business, whereas its true form capitalism should be pro 438 00:24:34,000 --> 00:24:36,360 Speaker 5: competition and pro Churin the. 439 00:24:36,320 --> 00:24:38,600 Speaker 2: Book is What Went Wrong with Capitalism and the author 440 00:24:38,760 --> 00:24:44,600 Speaker 2: is Rushirm Sharma of Rockefeller International, coming up the unique 441 00:24:44,640 --> 00:24:47,960 Speaker 2: partnership of Warren Buffett and Charlie Munger through the eyes 442 00:24:48,040 --> 00:24:51,080 Speaker 2: of they're a lawyer for over fifty years. Ron Olsen 443 00:24:51,200 --> 00:24:55,000 Speaker 2: of Munger, Tolls and Os, I'd know no partnerships that 444 00:24:55,080 --> 00:24:57,399 Speaker 2: have lasted as long as the two. 445 00:24:57,280 --> 00:24:58,359 Speaker 3: Of them had. 446 00:25:00,160 --> 00:25:02,399 Speaker 2: That's the next time Wall Street Week on Bloomberg. 447 00:25:03,920 --> 00:25:08,160 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 448 00:25:08,280 --> 00:25:11,040 Speaker 1: Bloomberg Radio. 449 00:25:16,000 --> 00:25:18,840 Speaker 2: This is Wall Street Week. I'm David Weston. Warren Buffett 450 00:25:18,920 --> 00:25:22,680 Speaker 2: or Charlie Munger would have been historic investors individually if 451 00:25:22,680 --> 00:25:25,800 Speaker 2: they'd never met one another. But they did meet and 452 00:25:25,880 --> 00:25:28,960 Speaker 2: formed a partnership for over fifty years. One which they're 453 00:25:28,960 --> 00:25:31,920 Speaker 2: a lawyer. Ron Olsen of Munger Toles and Olsen observed 454 00:25:31,960 --> 00:25:35,199 Speaker 2: from close up almost since it began. We talked with 455 00:25:35,280 --> 00:25:38,439 Speaker 2: Ron about that partnership, what made it work and what 456 00:25:38,600 --> 00:25:39,440 Speaker 2: made it different. 457 00:25:40,280 --> 00:25:45,960 Speaker 3: Neither Warren nor Charlie are typical. Did they have problems 458 00:25:46,000 --> 00:25:51,399 Speaker 3: that were similar, Yes, but Warren and Charlie had the 459 00:25:51,440 --> 00:25:56,600 Speaker 3: owner's attitude from day one and took a deep, deep 460 00:25:56,720 --> 00:26:01,080 Speaker 3: interest in any problem. They did their own more. They 461 00:26:01,080 --> 00:26:05,800 Speaker 3: didn't believe in consultants. They didn't believe in uh, you know, 462 00:26:05,920 --> 00:26:10,880 Speaker 3: figuring out compensation for the managers with a compensation consultant. 463 00:26:11,080 --> 00:26:16,920 Speaker 3: They operated independent of Wall Street, so they were very 464 00:26:16,960 --> 00:26:22,119 Speaker 3: different than most other clients, I would say, and the 465 00:26:22,160 --> 00:26:25,960 Speaker 3: fact that they owned the problem. They each had a 466 00:26:26,000 --> 00:26:29,280 Speaker 3: deep understanding of every problem I got into. Maybe the 467 00:26:29,359 --> 00:26:35,040 Speaker 3: first one was that was significant was when they acquired 468 00:26:35,080 --> 00:26:38,879 Speaker 3: the Buffalo Evening News and within a few days thereafter, 469 00:26:39,000 --> 00:26:43,399 Speaker 3: the competitive newspaper, The Courier Express, filed an anti trust 470 00:26:43,480 --> 00:26:48,120 Speaker 3: case with a rather loudmouth planet Off's attorney from San 471 00:26:48,119 --> 00:26:51,560 Speaker 3: Francisco that I knew well it had a lot of 472 00:26:51,560 --> 00:26:55,800 Speaker 3: fun with actually Fred Furd and uh so. I spent 473 00:26:56,119 --> 00:27:02,800 Speaker 3: a good part of that winner on that case, and Warren, 474 00:27:02,880 --> 00:27:06,440 Speaker 3: of course was deeply interested in it as well as Charlie. 475 00:27:07,280 --> 00:27:11,880 Speaker 3: He claimed that the process that was being used by 476 00:27:13,480 --> 00:27:19,360 Speaker 3: really Warren developed to introduce the Buffalo Evening News as 477 00:27:19,400 --> 00:27:23,679 Speaker 3: a competitive morning paper as opposed to an afternoon paper, 478 00:27:25,720 --> 00:27:30,440 Speaker 3: was monopolization. Judge Briant in the trial court wrote a lengthy, 479 00:27:30,520 --> 00:27:35,720 Speaker 3: lengthy opinion against us and basically made the point that 480 00:27:36,119 --> 00:27:40,360 Speaker 3: Berkshire had not complied with the rules the marquee Queensberry 481 00:27:41,280 --> 00:27:45,480 Speaker 3: and Henry Friendley, and his opinion said, I've searched the 482 00:27:45,520 --> 00:27:49,560 Speaker 3: antitrust laws up and down and I couldn't find that 483 00:27:49,880 --> 00:27:54,160 Speaker 3: rule of the marquee a Queensberry. But at any rate, 484 00:27:54,280 --> 00:27:56,239 Speaker 3: Warren and I got to know each other, and of 485 00:27:56,280 --> 00:27:58,879 Speaker 3: course many other sins. I would say that we were 486 00:27:58,920 --> 00:28:02,160 Speaker 3: in the trenches the law longest in the Solomon problem, 487 00:28:02,320 --> 00:28:06,320 Speaker 3: and they're after you know, you build a relationship that 488 00:28:06,560 --> 00:28:10,640 Speaker 3: always goes beyond the problem. Ron talks about risk. 489 00:28:10,960 --> 00:28:13,639 Speaker 2: I mean at risk is at the center of investment decisions, 490 00:28:13,800 --> 00:28:15,760 Speaker 2: and it's also an important part of what lawyer does 491 00:28:15,920 --> 00:28:18,800 Speaker 2: is assess risk and a prize clients at that risk. 492 00:28:19,200 --> 00:28:22,639 Speaker 2: How does Warren Buffett approach risk in your experiences as lawyer? 493 00:28:23,280 --> 00:28:31,200 Speaker 3: Well carefully and he approaches it also often with Charlie. 494 00:28:31,320 --> 00:28:35,040 Speaker 3: I mean they would talk rarely, and particularly if you're 495 00:28:35,080 --> 00:28:41,320 Speaker 3: talking about risk associated with an investment that was a 496 00:28:41,400 --> 00:28:45,800 Speaker 3: regular occurrence, and each of them approach that, I think 497 00:28:45,880 --> 00:28:50,560 Speaker 3: somewhat differently. They have a different set of priorities, a 498 00:28:50,560 --> 00:28:54,360 Speaker 3: different set of readings, a different set of life experiences. 499 00:28:54,840 --> 00:29:01,040 Speaker 3: Born as you know, very gregarious out front. He's the 500 00:29:01,080 --> 00:29:04,239 Speaker 3: one who cuts the deals. Charlie is still sitting in 501 00:29:04,240 --> 00:29:07,360 Speaker 3: his chair, as his kids say, he looks like a 502 00:29:07,400 --> 00:29:12,040 Speaker 3: book with two legs, reading every day. Now. The two 503 00:29:12,080 --> 00:29:17,120 Speaker 3: of them had this unique partnership. And it's another reason 504 00:29:17,360 --> 00:29:20,720 Speaker 3: I don't have a lot of clients with a unique 505 00:29:20,920 --> 00:29:28,200 Speaker 3: partnership like that. There's complete trust. There was a grounding 506 00:29:28,320 --> 00:29:36,960 Speaker 3: in I would say Midwestern values. Warren had and Charlie too, 507 00:29:37,640 --> 00:29:45,240 Speaker 3: had both had big, developed accounting capabilities. They both read 508 00:29:45,280 --> 00:29:49,720 Speaker 3: all the financials, knew them well. But they didn't buy 509 00:29:49,960 --> 00:29:55,600 Speaker 3: companies without an established record of consistent profits for five 510 00:29:55,680 --> 00:30:02,920 Speaker 3: years or more, a leadership that they trusted with, that 511 00:30:03,040 --> 00:30:06,280 Speaker 3: were that had integrity and had run the companies that 512 00:30:06,320 --> 00:30:10,719 Speaker 3: they were about to acquire. And one question Warrenois asked 513 00:30:10,880 --> 00:30:14,880 Speaker 3: was is this person going to love the money more 514 00:30:14,920 --> 00:30:18,920 Speaker 3: than he loves the business, because Berkshire is about to 515 00:30:18,920 --> 00:30:23,400 Speaker 3: make him very rich? And if they did, it wasn't 516 00:30:23,440 --> 00:30:26,400 Speaker 3: a deal. They did. If they loved the business more, 517 00:30:26,480 --> 00:30:30,280 Speaker 3: that's who we want. And so it was a combination 518 00:30:30,640 --> 00:30:35,440 Speaker 3: of risk assessment. But as I say, I think Charlie 519 00:30:35,480 --> 00:30:40,200 Speaker 3: added the perspective that uh and he was guided. He 520 00:30:41,520 --> 00:30:45,720 Speaker 3: read every great psychologist and knew all the biases that 521 00:30:45,840 --> 00:30:50,600 Speaker 3: exist in judgment and the enthusiasm of deal was more 522 00:30:50,640 --> 00:30:56,680 Speaker 3: evident and warn u but confirmation bias was something Charlie 523 00:30:57,080 --> 00:30:59,880 Speaker 3: guarded against and everything he did, and. 524 00:31:01,400 --> 00:31:05,080 Speaker 2: Those are some of the thoughts having watched this partnership 525 00:31:05,120 --> 00:31:07,040 Speaker 2: for over fifty years, as you say, from a pretty 526 00:31:07,040 --> 00:31:10,320 Speaker 2: close distance, Actually what caused it to sustain it. 527 00:31:10,320 --> 00:31:13,680 Speaker 3: Has to be clear. Charlie joined the board in nineteen 528 00:31:13,760 --> 00:31:17,120 Speaker 3: seventy five, but the partnership of the two of them 529 00:31:17,560 --> 00:31:24,560 Speaker 3: informal and then later very much a part of Berkshire 530 00:31:24,560 --> 00:31:25,800 Speaker 3: Hathaway existed. 531 00:31:25,880 --> 00:31:29,680 Speaker 2: Yes, so that partnership what sustained it, because we have 532 00:31:29,720 --> 00:31:32,680 Speaker 2: seen other partnerships that are based on mutual trust and 533 00:31:32,880 --> 00:31:35,640 Speaker 2: different contributions to the two partners and that have been 534 00:31:35,680 --> 00:31:38,080 Speaker 2: close partnerships, but they don't tend to last for over 535 00:31:38,120 --> 00:31:38,960 Speaker 2: fifty years. 536 00:31:39,320 --> 00:31:44,920 Speaker 3: Well, I would say a couple of things. I mentioned 537 00:31:44,920 --> 00:31:48,680 Speaker 3: the common backgrounds. They both had IQs that are off 538 00:31:48,680 --> 00:31:53,280 Speaker 3: the chart. They both respected that they both had memories 539 00:31:53,280 --> 00:32:00,560 Speaker 3: that exceeded mind, and they respected that they both were 540 00:32:00,680 --> 00:32:05,560 Speaker 3: interested in building a company that would have permanence and 541 00:32:05,960 --> 00:32:09,840 Speaker 3: committed themselves to it, particularly when Warren went along with 542 00:32:10,000 --> 00:32:15,160 Speaker 3: Charlie finally and moved from buying what were referred to 543 00:32:15,200 --> 00:32:19,320 Speaker 3: as cigarette companies with a few puffs left at a 544 00:32:19,400 --> 00:32:23,440 Speaker 3: cheap price, and Charlie convinced them that it's far better 545 00:32:23,560 --> 00:32:27,520 Speaker 3: for permanence to buy wonderful companies at a fair price 546 00:32:27,640 --> 00:32:33,600 Speaker 3: than fair companies at a wonderful price, and they were 547 00:32:33,640 --> 00:32:38,920 Speaker 3: dedicated to that. And as Warren said in his Tribute 548 00:32:38,920 --> 00:32:42,040 Speaker 3: to Charlie and the Annual Letter, he let him take 549 00:32:42,080 --> 00:32:49,440 Speaker 3: the bows. And he also knows in the letter that 550 00:32:50,520 --> 00:32:53,680 Speaker 3: after he had blundered and made a mistake on something, 551 00:32:55,000 --> 00:32:59,719 Speaker 3: Charlie never reminded him of it, and that Charlie was 552 00:32:59,760 --> 00:33:03,680 Speaker 3: to Warren very much like the combination of a brother 553 00:33:03,800 --> 00:33:04,440 Speaker 3: and a father. 554 00:33:05,080 --> 00:33:07,720 Speaker 2: You talk about permanence and the fact that Warren and 555 00:33:07,800 --> 00:33:11,320 Speaker 2: Charlie wanted something that was permanent. Unfortunately, in human institutionions, 556 00:33:11,360 --> 00:33:15,280 Speaker 2: nothing's permanent. We've lost Charlie Munger Sadlely, Warren has no 557 00:33:15,320 --> 00:33:17,840 Speaker 2: inclination in fears of goingwhere at the same time there 558 00:33:17,840 --> 00:33:19,840 Speaker 2: will come a time when he's no longer with us. 559 00:33:20,360 --> 00:33:22,520 Speaker 2: Have they succeeded? You think in setting up something that 560 00:33:22,600 --> 00:33:28,520 Speaker 2: can be permanent, that can outlast even Warren Buffett, that's. 561 00:33:27,400 --> 00:33:30,560 Speaker 3: Not only the idea, but I am confident that that's 562 00:33:30,600 --> 00:33:35,400 Speaker 3: what says been built by the two of them, and 563 00:33:35,440 --> 00:33:42,840 Speaker 3: the board understands that it's ongoing obligation post Warren and 564 00:33:43,160 --> 00:33:47,360 Speaker 3: let's not get ahead of ourselves. He's not going anywhere soon. 565 00:33:47,520 --> 00:33:51,560 Speaker 3: I had a wonderful conversation with you yesterday morning, and 566 00:33:52,240 --> 00:33:57,239 Speaker 3: you know, the enthusiasm, the thinking is still there, just 567 00:33:57,280 --> 00:34:01,719 Speaker 3: like it always was. But I would say that the 568 00:34:01,760 --> 00:34:07,040 Speaker 3: Board has done a very good job in helping to 569 00:34:07,200 --> 00:34:17,520 Speaker 3: maintain the post Warren permanence by having Gray Gabel as 570 00:34:17,560 --> 00:34:18,960 Speaker 3: a designated successor. 571 00:34:19,760 --> 00:34:24,920 Speaker 2: That was Ronallson of Munger, Tolls and Olsen. George Bernard 572 00:34:24,920 --> 00:34:28,000 Speaker 2: Shaw advised that those who cannot change their minds cannot 573 00:34:28,080 --> 00:34:31,200 Speaker 2: change anything. Our leaders typically tend to want to change 574 00:34:31,239 --> 00:34:34,560 Speaker 2: things without changing their minds, or at least admitting they're 575 00:34:34,600 --> 00:34:37,680 Speaker 2: changing them, epitomized in the immortal words of Prime Minister 576 00:34:37,880 --> 00:34:39,319 Speaker 2: Margaret Thatcher to. 577 00:34:39,320 --> 00:34:43,880 Speaker 7: Those waiting with bated breath for that favorite media catchphrase, 578 00:34:43,960 --> 00:34:47,480 Speaker 7: the U turn. I have only one thing to say, 579 00:34:48,680 --> 00:34:53,400 Speaker 7: You turn if you want to. The ladies not for turning. 580 00:34:56,640 --> 00:34:59,640 Speaker 2: But there are exceptions, as when then Secretary of State 581 00:34:59,680 --> 00:35:02,000 Speaker 2: Hillary Clinton announced that the United States would make a 582 00:35:02,080 --> 00:35:05,480 Speaker 2: pivot away from Europe and toward Asia in its policies 583 00:35:05,520 --> 00:35:06,120 Speaker 2: going forward. 584 00:35:06,360 --> 00:35:08,080 Speaker 5: We have reached a pivot point. 585 00:35:08,800 --> 00:35:13,200 Speaker 8: We now can redirect some of those investments to opportunities 586 00:35:13,280 --> 00:35:18,280 Speaker 8: and obligations elsewhere, and Asia stands out as a regent 587 00:35:18,719 --> 00:35:20,480 Speaker 8: where opportunities abound. 588 00:35:20,880 --> 00:35:23,600 Speaker 2: This week, we've had any number of leaders political and 589 00:35:23,719 --> 00:35:27,360 Speaker 2: business very publicly changed their direction, starting with Prime Minister 590 00:35:27,480 --> 00:35:30,040 Speaker 2: Rishi Sunak, who thought better of his decision to cut 591 00:35:30,080 --> 00:35:32,600 Speaker 2: short his time of the D Day commemoration and hurry 592 00:35:32,640 --> 00:35:36,480 Speaker 2: back to campaign, admitting he'd made a bad mistake. Israeli 593 00:35:36,520 --> 00:35:40,319 Speaker 2: opposition leader Benny Gantz changed his mind about participating in 594 00:35:40,360 --> 00:35:43,440 Speaker 2: a wartime cabinet and said the Prime Minister Netanelle is 595 00:35:43,480 --> 00:35:46,640 Speaker 2: now quote preventing us from advancing to real victory. 596 00:35:47,080 --> 00:35:50,239 Speaker 6: What is the actual plan and that's not clear yet, 597 00:35:50,560 --> 00:35:54,000 Speaker 6: and that frustration is what led Benny Gants to decide 598 00:35:54,280 --> 00:35:56,560 Speaker 6: we can't do this anymore and take his party out. 599 00:35:56,719 --> 00:35:59,560 Speaker 2: A lot of European voters apparently changed their minds about 600 00:35:59,600 --> 00:36:02,960 Speaker 2: where the European Parliament should be headed, as they flocked 601 00:36:02,960 --> 00:36:04,920 Speaker 2: to more conservative opposition parties. 602 00:36:05,160 --> 00:36:07,920 Speaker 1: This right wing search did actually take place in the 603 00:36:08,200 --> 00:36:11,960 Speaker 1: two most important countries in Europe, not across the entire continents. 604 00:36:11,520 --> 00:36:14,600 Speaker 2: Which caused French President Macron to shake things up by 605 00:36:14,600 --> 00:36:16,719 Speaker 2: calling a snap election of his own parliament. 606 00:36:17,360 --> 00:36:17,839 Speaker 6: Above all. 607 00:36:17,880 --> 00:36:21,120 Speaker 3: I hope that on June thirtieth and July seventh, the 608 00:36:21,200 --> 00:36:24,320 Speaker 3: French will elect as many MPAs as possible from the 609 00:36:24,360 --> 00:36:26,240 Speaker 3: presidential majority. 610 00:36:26,440 --> 00:36:28,959 Speaker 2: But perhaps the biggest about face we saw this week 611 00:36:29,000 --> 00:36:32,320 Speaker 2: came from Sherry Redstone, who had been flirting for months 612 00:36:32,320 --> 00:36:34,839 Speaker 2: with a big deal that would merge Paramount into David 613 00:36:34,920 --> 00:36:38,080 Speaker 2: Ellison's sky Dance. Just as Global Wall Street was getting 614 00:36:38,120 --> 00:36:40,920 Speaker 2: ready for the big announcement, just as a special committee 615 00:36:40,920 --> 00:36:43,160 Speaker 2: of her board was getting ready to approve the transaction, 616 00:36:43,560 --> 00:36:46,560 Speaker 2: Miss Redstone apparently changed her mind and decided she wanted 617 00:36:46,600 --> 00:36:49,480 Speaker 2: to stay in the entertainment business her father had founded. 618 00:36:49,640 --> 00:36:52,040 Speaker 2: After all, at least for a Now, there's a fifty 619 00:36:52,040 --> 00:36:56,360 Speaker 2: percent chance that nothing happened that in the end, Sherry says, 620 00:36:56,880 --> 00:36:58,040 Speaker 2: this is too much. 621 00:36:59,360 --> 00:37:00,800 Speaker 5: I will just keep the company. 622 00:37:01,000 --> 00:37:03,200 Speaker 2: This is not the first time Paramount has needed to 623 00:37:03,239 --> 00:37:06,360 Speaker 2: turn things around, as his own miniseries They'll offer on 624 00:37:06,440 --> 00:37:09,880 Speaker 2: Paramount Plus recently explained it was in bad shape in 625 00:37:09,920 --> 00:37:13,799 Speaker 2: their early nineteen seventies. Now all Sherry Redstone needs is 626 00:37:13,840 --> 00:37:17,280 Speaker 2: a godfather. Paramount is going to come crashing down. 627 00:37:17,480 --> 00:37:21,480 Speaker 3: We need his You've read the guy Father, right? Godfather? Sure? 628 00:37:21,560 --> 00:37:22,279 Speaker 3: Who has that? 629 00:37:22,480 --> 00:37:24,359 Speaker 2: Does it? For this episode of Wall Street Week, I'm 630 00:37:24,440 --> 00:37:27,040 Speaker 2: David Weston. This is Bloomberg. See you next week.